Yahoo widens Net search options

BambiFrancisco

SAN FRANCISCO (CBS.MW) - A month after Yahoo dropped Google as its algorithmic search engine, the online portal is unveiling the first of a number of new search initiatives that will be rolled out over the coming months.

Yahoo
YHOO, +0.85%
plans on rolling out Content Acquisition Program, or CAP, which is designed for both non-commercial and commercial sites, on Tuesday.

The program is designed to allow content providers to be more involved in the search process. They will be able to give Yahoo the pages they'd like to be searched.

It also helps Yahoo aggregate relevant Web pages now that it no longer can rely on Google's listings.

There are 10 billion to 100 billion Web pages, said Tim Cadogan, vice president of search at Yahoo, which has indexed several billion pages. Clearly, there are many more pages to index, Cadogan said.

Non-commercial content sites include information that's in the domain of public libraries, universities or nonprofits. National Public Radio (NPR), Northwestern University, the Library of Congress and the New York Public Library, to name a few, have agreed to give Yahoo certain pages to crawl.

"We have a dedicated team to work with these folks and make their content accessible to users," said Cadogan.

Yahoo will not charge the organizations to be listed. But Yahoo believes that results will be more relevant to users if nonprofits or universities are able to offer Web pages that are most relevant for a particular keyword.

Paid inclusion

Yahoo's commercial component of CAP is called Site Match.

It expands on Yahoo's current paid-inclusion program and will be operated by Overture, Yahoo's sponsored search subsidiary.

Site Match combines the paid-inclusion programs of Inktomi, Alta Vista and Fast into one algorithmic search engine. Marketers typically pay to be included in such a program for their Web pages to be crawled more frequently, and to ensure they can offer which pages they want to be searched. The ranking process is determined by relevancy.

With Site Match, marketers don't have to go to the separate entities.

"Site Match integrates the programs into one," said Cadogan.

To be included in the search results, Yahoo will now charge an annual fee of $49 for the first URL, or Web page.

The following two to 10 pages will cost 29 cents each. Additional pages up to 999 will cost 10 cents each. Subscribers then pay a fixed cost-per-click of 15 cents for each customer lead.

Prior to Site Match, Inktomi charged $39 annually per URL for a marketer that wanted to be part of its paid inclusion program. Alta Vista charged $79. The paid-inclusion programs never offered a cost-per-click payment option.

Among the companies that have signed up for Site Match include CarsDirect, InterActiveCorp's
IACI, +0.00%
Hotels.com and Sabre Holdings'
TSG, -5.00%
Travelocity.

It's unclear how much Yahoo will generate from its new paid-inclusion program that the Overture sales force will now be able to sell to current accounts.

But here's a back-of-an-envelope calculation based on reasonable assumptions.

If Yahoo were crawling 3 billion Web pages, and 20 percent, or 600,000,000, were relevant, and if Yahoo could get 5 percent of those pages to be paid for, or 30 million, and if each of those pages were owned by different entities, then Yahoo could add $14.7 million. And, assuming that these pages are clicked on only once, then Yahoo could make an additional $4.5 million on top of that.

That means Yahoo could generate $20 million per year, or $5 million per quarter.

Jordan Rohan, an analyst at Schwab SoundView, estimates that Inktomi sales will rise from $30.4 million last year to $74 million this year, largely due to the paid-inclusion initiative.

The timing of the rollout is key, he wrote, in an e-mail. Yahoo has not shifted away from Google algorithmic search in the vast majority of international territories. Rohan said that Yahoo told him that it planned to roll out internationally this year.

Additionally, Rohan estimated that LookSmart's
LOOK, -1.07%
paid inclusion gross revenues were roughly $25 million in the fourth quarter. At that time, LookSmart's largest distribution partner was Microsoft's
MSFT, +1.57%
MSN. If Yahoo were to grow as large as LookSmart/MSN, then there could be upside to his estimates.

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